European Commissioner Margrethe Vestager’s plan to invest in EU companies is a very bad idea. According to BNR macroeconomist Edin Mujagic, the EU will have to pay a heavy price for increased government involvement.
EU Competition Commissioner Margrethe Vestager calls for investment and more venture capital to grow tech companies in Europe. According to Mujagic, these are mostly “companies that are green or are engaged in green activities.”
And this is “enough” for a European commissioner who must ensure more competition, says macroeconomist Edin Mujagic. “You call it an alternative to subsidies. If the EU is still looking for an alternative to subsidies, it would be better to optimize the business climate for companies.’ According to Mujagic, it is more useful when companies can more easily produce and then sell their goods more easily. “By doing things like that you distort the market.”
State aid
If the EU takes an interest in a company, there is a good chance that company will be able to borrow money more easily from a bank. “Because the bank believes that such a company is less likely to fail because the EU invests in it,” Mujagic says. Yet another sign that the EU is abandoning its own rules. “We talk week after week about new protectionist measures and state aid that should be granted more easily.”
This fits into a broader picture where government intervention in the economy is the rule rather than the exception, says the economist. And the EU should stay away from it. “Many Eastern European countries are members of the EU and these are countries that have been pursuing this policy for decades and it has failed everywhere.”
Price
A route that should not be taken, even if the United States does. The danger is that the innovative capacity of the European economy will be reduced in the long term with a policy in which government involvement is high, thinks Mujagic. “There is a price for this policy.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
